Pharmacoeconomics and Pharmacy Management
Core concepts
Understand the types of economic evaluation: cost-minimization, cost-effectiveness (cost per health outcome, e.g., cost per life-year gained), cost-utility (cost per QALY), and cost-benefit (monetary outcomes). Know the perspective of the analysis (society, payer, patient) because it changes which costs count. Distinguish direct costs (medical and non-medical), indirect costs (productivity loss), and intangible costs. Learn the meaning of incremental cost-effectiveness ratio (ICER) and the willingness-to-pay threshold.
Management
Know inventory management principles (ABC analysis, economic order quantity, safety stock, stock rotation, expiry control), budgeting, and the difference between fixed and variable costs. Understand pricing and reimbursement concepts, generic substitution economics, and the role of pharmacoeconomic evidence in formulary decisions. Quality management and risk management (error reporting, root-cause analysis) belong here too.
Traps in questions
- Comparing interventions without computing the incremental ratio (ICER), which is what decision-makers use.
- Mixing up cost-effectiveness (natural units) with cost-utility (QALYs).
- Forgetting that perspective determines whether indirect costs are included.
- Confusing ABC analysis (value-based inventory classification) with simple stock counts.
Worked example (rule of thumb)
ICER = (Cost_new − Cost_old) / (Effect_new − Effect_old). If the new therapy costs 10,000 more and yields 0.5 extra QALYs, the ICER is 20,000 per QALY. Compare that to the willingness-to-pay threshold to judge value; a negative denominator means the new option is both cheaper and more effective (dominant).